Consumers repaid debts and poured money into cash Isas in 2012, according to figures from the British Bankers' Association (BBA).

The amount held in savings accounts with banks rose by 6.1% over the year, despite savage cuts in the interest rates available in the second half of the year.

The BBA said inflows into cash Isas had been particularly strong as savers tried to get the best rate they could. Over the course of 2012, net inflows into the tax-free accounts added up to £19.5bn, an increase of almost 70% on the previous year's figure of £11.6bn.

At the same time as putting money away, consumers continued to pay off debt – for the year as a whole new mortgage lending of £92bn was almost outstripped by repayments of £91bn.

The outstanding level of unsecured borrowing contracted by 1.6%. Within this, there was a 5.7% increase in the amount borrowed on credit cards, but debt in the form of personal loans and overdrafts fell by 7%.

"2012 was a year of holding on to deposits and repaying debt for companies and households," the BBA's statistics director David Dooks said.

Mortgage lending continued to be weak, with the number of loans granted each month standing at 63,000 – less than a third of the 230,000 a month approved when demand peaked in 2003.

House purchase loans were down 2% year-on-year. However, there were signs first-time buyers were starting to come back into the market following the introduction of the government's Funding for Lending scheme and some mortgage launches at higher loan-to-values.

Gross mortgage lending reached £8.1bn in December against a previous six-month average of £7.4bn, and the number of house purchase loans stood at 33,636 against an average of 30,979 over the previous six months.

Remortgage deals failed to look attractive to anyone without at least 40% of equity in their property, and the BBA's figures showed the number of approvals for people switching lender in 2012 was down 23% on 2011's figure. It remained low as the year drew to a close, with just 17,698 remortgages approved in December.

Dooks said: "Credit availability increased and pricing reduced towards the year-end as banks developed product offerings using the Funding for Lending scheme, which is expected to bring further benefits to households and businesses in 2013."

However, Howard Archer, chief UK economist at IHS Global Insight, suggested consumers were unlikely to rush out to take on new borrowing, even if it was being made available.

"Unsecured consumer credit still remains very low compared to long-term norms, and the impression remains that consumer appetite for taking on new borrowing is limited while there is also an ongoing strong desire of many consumers to reduce their debt.

"Consumers' desire and perceived need to deleverage is clearly the consequence of ongoing serious concerns over the current state of the economy and still heightened worries and uncertainties over the outlook."

The BBA figures also showed a net repayment in loans to businesses in December, with lending to companies reduced by £3.5bn over the month.